A solid stance for all on building code

Work practices at Victoria’s desalination plant have emerged as a feature of other agreements. Photo: Luis Ascui

John Lloyd

The Victorian government is to be commended for enforcing its building industry code of conduct. The decision to ban Lend Lease from tendering for government projects shows it is serious about reining in construction costs. The consequences for Lend Lease are significant as government work is a reliable underpinning for a construction contractor.

The code’s implementation guidelines clearly state contractors’ obligations. The building and construction industry is littered with many code and contract requirements, which participants typically expect clients and regulators to show flexibility in administering.

Flexibility means recognising “the reality” of workplace relations and accepting that unions dictate the terms of pattern enterprise agreements and working arrangements on site.

The Victorian government has decided to reject this way of doing business. The appalling desalination plant project steeled its resolve – extravagant entitlements and work practices won on the desal plant have emerged as a feature of other agreements, and the cost of building infrastructure in Victoria was becoming unsustainable for a government with a tight budget.

At the same time, the federal government took a retrograde decision to emasculate its regulation of the industry.

This was strenuously opposed by clients and contractors but payback to the building unions prevailed and changes were made.

The Office of the Australian Building and Construction Commissioner was abolished and penalties reduced by one third. The new regulator has less power and less capacity, or will, to fight unlawful conduct.

The result, predicted by many, is that workplace relations have deteriorated quickly – intimidation, stand-over tactics and brutal industrial activity have returned with a vengeance as evidenced by headline disputes involving Grocon and a West Australian contractor at a boutique Geelong brewery.

In addition, there are reports that stand-over tactics are sometimes attended by threats of violence. Many in the industry have concluded that the bad old days have returned, especially in Victoria.

The federal government appears ignorant of the industry’s history. Appeals to respect for the law, reason and tolerance have not worked. Industry players require strong regulators with strong powers backed by a determination to enforce the law with rigour.

This is the only approach that has succeeded in bringing a semblance of lawful conduct and productivity to the industry.

The Victorian government has a daunting task. Entrenched interests that benefit from lax regulation will attempt to undermine the code and its guidelines. Managers of government projects and the Code Compliance Unit will need to be vigilant – Victorian government projects were heavily targeted for unlawful conduct in the past. Once a code is in place, non-adherence cannot be tolerated.

The reasons for a tough approach are compelling. It is not about beating unions into submission; it is about having a productive, competitive and law-abiding industry. The requirement for more government infrastructure is insatiable as our population grows. The benefits of projects completed on time and within budget are clear.

Also, honest contractors and workers have a right to pursue their business activity or employment in a lawful environment. It is intolerable in 2012 that they should be concerned about being confronted daily with unlawful conduct and intimidation as they go about their affairs.

The Victorian government is to be admired for its stand. It has no option but to follow through against other contractors that do not comply with the guidelines. It is simply making a statement, that as a client of the industry, proper standards will apply on its projects.

It is to be hoped that other state governments adopt the Victorian approach and fill the void created by the capitulation of the federal government to the unions.

John Lloyd is director of the work reform and productivity unit at the Institute of Public Affairs and was formerly the Australian Building and Construction commissioner.